“Best July for closed sales and pending sales in a decade!” shout the real estate headlines. It’s a sign of healthy market activity. As you can see from the chart, the number of sales in the District has been climbing steadily (with seasonal adjustments) from 343 in January 2008 to 821 this past July 2015. At the same time, however, available residential property listings have steadily declined, from 2,815 in January 2008 to a low point of 966 in January 2013. For the past two years, this number has floated seasonally between 1,000 to 1,500 active listings per month. (Sales and supply tend to be higher in the spring and fall seasons and lower in the winter.)
What does this mean for sellers and buyers in the current real estate market in D.C.?
For sellers, it means that the market is still weighted to their advantage, because along with strong sales, there is still a shortage of homes to sell. There is currently a 1.9 months’ supply of homes on the market, which means that if all new listings stopped today, it would take 1.9 months to sell off the currently active listings based on the average days on the market before a property is sold. (In a fully balanced market between sellers and buyers, there is a six-month supply of active listings.)
Even with the strong sales in July, the District has a low number of active listings (available properties). Strong sales means those listings are selling rapidly, but there aren’t enough new properties being listed on the market to make up for those sales. Low supply means higher prices for available properties, which works well for sellers, but not so well for buyers.
For buyers, the news is only slightly encouraging in that the number of active listings seems to have turned a corner from its low point in January 2013, and to be slowly climbing.
But with seasonal adjustments factored in, it’s too early to tell whether the number of active listings is actually increasing, or just floating higher and lower throughout the seasonal markets. And it’s not clear yet whether the usual summer slump in August will hit this year. But prices are typically lower in the summer and winter, so if you can buy during these seasons you will typically pay a lower price for a property.
Ted Smith is a licensed Realtor with Real Living | at Home specializing in mid-city D.C. Reach him at TedSmithSellsDC@rlathome.com and follow him on Facebook, Youtube or @TedSmithSellsDC. You can also join him on monthly tours of mid-city neighborhood Open Houses, as well as monthly seminars geared toward first-time homebuyers. Sign up at meetup.com.